Hanwha Life Vietnam Holds 10th Anniversary Celebration and End of Fiscal Year Awards Ceremony

When did Hanwha Life Insurance start business in Vietnam? And, what has been accomplished so far?

We were established as a wholly owned subsidiary of Hanwha Life in September of 2008 and began operations in April of 2009 by opening one branch in Hanoi and two in Ho Chi Minh City. This was the first time a Korean insurance company opened a wholly-owned foreign subsidiary in Vietnam.

Since then, we’ve grown into a medium-sized life insurance company in the country with a network of 106 branches nationwide by the end of 2018. We have nearly 310 local employees as well as over 14,000 agents.

With more than 100,000 customers, we have the fastest growth among life insurance companies that have entered the Vietnamese market less than a decade ago.

What are the characteristics of financial service customers in Vietnam? And, how much are they interested in insurance?

Thanks to the nearly 7% annual economic growth, Vietnam is developing at breakneck speed. However, its financial market is underdeveloped, with most of the public not having bank accounts.

The Vietnamese people are hard-working and diligent with a strong desire to improve their quality of life. They care about their families, particularly their children’s education, so they actively save and invest their money.

Their interest in insurance is aligned with this tendency, as we saw in the early stage of the Korean life insurance industry. The focus is on savings insurance plans, where premiums are refunded at maturity, as well as conventional endowment insurance plans to prepare better futures for their families.

Although Vietnamese consumers are generally not looking to purchase insurance at the moment, the benefits of life insurance and other insurance-based investment plans will undoubtedly lead to rising demand that will be faster than expected. We are focusing on endowment policies and savings insurance, but we are seeing a gradually increasing demand for coverage among younger people and middle-class families.

Nearly 70% of population in Vietnam live in rural areas. What obstacles have there been to your sales campaigns and marketing strategies? And, how have you addressed these obstacles?

Vietnam has enjoyed fast economic growth since it instituted economic reforms in 1986. But rural residents, as well as the urban poor, still make up a large portion of the population. Fortunately, the rapid growth of the middle class is changing the landscape of both urban and rural areas. We’ve found that sales are growing faster in small to mid-sized cities and in rural areas than in metropolitan areas.

In Korea, Hanwha Life’s growth flourished through face-to-face meetings between customers and salespeople. We leveraged this knowledge and experience to create a localized approach and empowered every local employee with complete responsibility over their sales in the field. After all, they were the ones who knew the local market and cultural practices better than anyone.

And to address Hanwha Life’s lack of brand recognition among local consumers, we consistently engaged in various CSR activities, such as donations for the building of new homes, charity projects to support the construction of health centers, kindergartens and schools, and a health insurance card issuance program. These activities were in addition to conventional PR activities using media. While these efforts were intended to improve the reputation of our brand and to expand our client base, the underlying fact was, they really did help the people of Vietnam.

We also focused on hiring our salespeople locally from a very strong pool of individuals with professional backgrounds in public service, education, and finance. In so doing, the quality of our services improved and our salespeople who were already connected to the public, were able to effectively educate and positively change the general perception of life insurance.

What is the current state of the Vietnamese insurance market? Please share with us the gap between Vietnamese and Korean insurance markets.

The life insurance industry in Vietnam dates back only to 1996, when a state-owned insurance company was founded. The industry was invigorated in 1999, when foreign life insurance companies set up local operations and began doing business. Thus, the Vietnamese life insurance industry is less than twenty years old.

In a relatively short span of time 18 global insurance companies have already established themselves in the market today. Of these, the top five companies, including Hanwha Life, have made inroads into local market earlier than others between the late 1990s and the early 2000s. These top five now account for 80% of the local market share. The other 13 companies are considered latecomers and are now competing for the remaining 20% of the market share.

By the end of 2018, the Vietnamese industry stood at KRW 15 trillion under management, which is just 1.8% of Korea’s KRW 857 trillion assets under management (AUM). Its annual premium income reached KRW 4.4 trillion, nearly 4% of Korea’s premium income of KRW 114 trillion. It is still in the early stages, but Vietnam is one of the fastest growing insurance markets globally with an annual growth rate of more than 30%.

How much potential do you think Vietnam’s financial and insurance markets have? And, why do you think so?

As I said before, the life insurance market in Vietnam is in its infancy stage but with its AUM and premium income showing just 1% to 2% of the Korean market, large global life insurance companies are trying to set up their business here in this market.

In fact, the local market is seeing more than one new player every year. The first reason is that Vietnam’s population is quickly growing towards 100 million people while its economy is growing at a healthy pace of 6% annually. The country also has limitless potential as half of the nation is currently under the age of 30, a lucrative segment typically with the highest demand.

Another reason is the easy access to a pool of qualified human resources. The credit goes to a nation of people who are well-educated and can therefore supply any company seeking expansions into neighboring countries, with the human capital to do so.

What are Hanwha Life Vietnam’s goals for the future?

First, I’m confident we’ll become an industry-leading player in the local life insurance industry as fast as possible by achieving the mid- and long-term objectives we set for the expansion of our business. As the leader of this organization, I encourage all employees of Hanwha Life Insurance Vietnam to achieve our common goals by 2020.

Second, we’ll be able to leverage the knowledge and experience we’ve gained from our pioneering years in the life insurance industry in Korea to provide superior products and customer service in Vietnam. We’ll also be able to implement education programs and activity management systems to develop the optimal work culture and sales teams that are best for the Vietnamese local markets.

Lastly, we will keep spreading a positive image of Korea and the good that Hanwha does throughout Vietnam as part of our PR efforts to strengthen our relationship with and educate the general public on the importance and value of insurance.

Finally, do you have any advice for financial services companies planning to expand into the Vietnamese market?

Since the Vietnamese financial services industry does not have clearly defined rules and regulations, the arbitrary interpretation of the laws by the local authorities makes up a large part of market regulation. Therefore, a careful and detailed approach to legal affairs is required for any company interested in investing or setting up operations in the local market.

Also, one should have a good understanding of the Vietnamese culture, living habits, the geography and the cultural aspects of the local market. It’s important to identify what your strengths are and be able to correctly determine whether your strengths can lead to success in this market.